How To Calculate Marginal Revenue in Freshsales | Arithmix

Calculating marginal revenue is an important aspect of any business. It helps you understand how much revenue you can expect to generate from each additional unit of product or service sold. In this article, we will discuss what marginal revenue is, when it is valuable to calculate it, and how to calculate it in Freshsales.

What Is Marginal Revenue?

Marginal revenue is the additional revenue generated by selling one more unit of a product or service. It is calculated by subtracting the total revenue generated by the sale of n-1 units from the total revenue generated by the sale of n units. In other words, it is the change in revenue resulting from a change in the quantity sold.

For example, let's say a company sells 100 units of a product for $10 each, generating a total revenue of $1,000. If the company sells 101 units of the same product for $10 each, generating a total revenue of $1,010, the marginal revenue for the 101st unit is $10.

When Is It Valuable To Calculate Marginal Revenue?

Calculating marginal revenue is valuable in a variety of situations. For example, it can help businesses determine the optimal price to charge for their products or services. By understanding how much additional revenue they can generate from each additional unit sold, they can set prices that maximize their profits.

Marginal revenue can also be used to determine the point at which a business should stop producing a product or service. If the marginal revenue is less than the marginal cost of producing the product or service, it may not be profitable to continue producing it.

How to Calculate Marginal Revenue in Freshsales

To calculate marginal revenue in Freshsales, you will need to have access to your sales data. This data should include the total revenue generated by each sale, as well as the quantity of products or services sold.

Once you have this data, you can calculate the marginal revenue for each additional unit sold by using the following formula:

Marginal Revenue = (Total Revenue for n units) - (Total Revenue for n-1 units)

For example, let's say you sell 100 units of a product for $10 each, generating a total revenue of $1,000. If you then sell 101 units of the same product for $10 each, generating a total revenue of $1,010, the marginal revenue for the 101st unit is $10.

By calculating marginal revenue in Freshsales, you can gain valuable insights into your business and make informed decisions about pricing and production. So start crunching those numbers and watch your profits soar!

How Do You Calculate Marginal Revenue in Freshsales

Freshsales itself isn’t naturally geared towards letting you calculate complex metrics like Marginal Revenue. As an alternative, teams typically use products like Arithmix to import data from Freshsales and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Freshsales, combine it with data from other systems, and create calculations like Marginal Revenue.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Marginal Revenue in Arithmix

Calculating metrics like Marginal Revenue is simple in Arithmix. Once you've created your free account, you’ll be able to import your Freshsales data, and use it to create natural language formulas for metrics like Marginal Revenue.

Arithmix is designed to give you the power to build any calculations you want on top of your Freshsales data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.